by ASILA JALIL / pic by BLOOMBERG

MALAYAN Banking Bhd (Maybank) is expected to capitalise the strong current account savings account (CASA) growth trend as the bank focuses on capital and liquidity conservation by growing low-cost funds via CASA across its home markets.

MIDF Amanah Investment Bank Bhd head of research Imran Yassin Mohd Yusof said it would not be a challenge for Maybank to increase its CASA given the current prevalent industry trend.

“Maybank’s CASA grew 24.1% year-on-year to RM651.9 billion as at the end of January 2021. This is understandable during the loan moratorium period as the borrowers had spare cash which was kept in CASA,” he told The Malaysian Reserve.

He said this was combined with other factors such as low fixed deposit rates due to the Overnight Policy Rate cuts and depositors’ reluctance to tie up their cash in fixed deposit accounts due to the uncertain economic environment. Strong CASA growth trend is also expected to continue this year for the banking industry while it is in a post-blanket loan moratorium period, Imran Yassin said. Maybank group president and

CEO Datuk Abdul Farid Alias recently said the bank is expected to leverage fee-based income opportunities in wealth management, global markets, investment banking, asset management and insurance.

He said the group expects the interest-rate environment in its home markets to remain “relatively unchanged” which will result in a flattish net interest margin trend for the year.

“Capital and liquidity conservation will remain the utmost priority for the group given lingering uncertainties over a potentially weakening credit environment. We will focus on growing low-cost funds in the form of CASA across our home markets in view of the low rate environment,” he stated in Maybank’s 2020 Annual Report.

He said Malaysia’s economic recovery is expected to be gradual and uneven amid pandemic containment measures, such as the second round of Movement Control Order, emergency declaration and vaccine rollout.

In Singapore, a U-shaped recovery is anticipated premised on the services sector rebounding with an estimated economic growth of 4.5%, while Indonesia’s GDP is expected to rebound by 5.3% supported by accommodative monetary policy by Bank Indonesia and the passing of the highly anticipated Omnibus Law, which will simplify business and attract more foreign investment, among others.

“While there are expected challenges to income growth given the tentative operating landscape, we remain focused on driving productivity and managing cost, in line with income growth.

“We will also continue monitoring asset quality closely for potential slippages given the uneven trajectory of economic recovery expected in some markets.

“On the back of a soft operating environment and potentially elevated provisioning, the group has set a return on equity key performance indicator of circa 9% for financial year 2021 (FY21),” Abdul Farid said.

The group saw its net profit for FY20 decline by 20.9% to RM6.48 billion from RM8.2 billion in FY19 due to higher net impairment losses as a result of the pandemic.

Despite the fall in net profit, Maybank declared a dividend of 52 sen per share for FY20, translating to a dividend payout ratio of 91.2%.